Whenever I talk to a creative agency owner, one of the biggest problems on their agenda is getting paid on time and the collection of cash.
You know that feeling…… You send out an invoice and you wait and wait for it to be paid.
After it’s gone way over it’s overdue time, you ring up your customer to be hit with a raft of excuses. Excuses like, “We couldn’t pay it because we didn’t get it.” Or “Oh yeah, I’m glad you’ve rung. You need to conclude a PO number on the invoice before we can pay it.”
Cash, or lack of cash, is a number one problem in small creative agencies today. So here’s three quick and easy ideas to get your cash flowing into your business and to make sure you get paid on time.
Be clear upfront.
Right from the outset of your engagement, be sure to agree exactly what’s needed to get an invoice paid.
Ask lots of questions up front…
Understand whether your customer needs you to include a PO number.
Ask who they need the invoice to be delivered to and ask about any specific invoice presentation formats that need to be followed….. For example, one of our customers has a client who will only accept invoices if they’re printed in black and white.
Be clear in your terms. Tell customers upfront exactly what your invoice and payment terms are. Make sure that they adhere to them.
Always make sure you keep the ball in your court. Most agencies will bill a proportion of the bill up front for a project. Anything between 20% to 50%. They’ll then bill for the remainder at the end of a project.
Big problem here is that projects can drag on for months because we’re waiting for the customer to complete something. Whether it be supply us with content or sign off on the design of their website.
You can keep the ball in your court by changing the terms.
Accept 50% up front, then another 25% on either the signing off of the design or 30 days after you’ve supplied the design, whichever comes sooner. Make sure you are always keeping control of your payment terms.
Then collect the balance before the project goes live.
Proactive and persistent credit control
There are two methods clients have found extremely useful.
The first one is a method of proactive credit control before a debt becomes due.
Three or four days after delivering the invoice, phone up your customer and ask them two simple questions.
have they got it?
have they any questions?
On the assumption that the answers are yes and then no, then you can proceed with a closing statement of, “I presume therefore the invoice will be paid on X date.”
If you do that you can deal with any objections to the invoice upfront and if a customer doesn’t pay you on time, they’re stripped of the two easiest objections to not paying and will have to think of something more creative.
Take a look at this video that walks you through the process in more detail
A lot of our clients are getting great results using automated credit control systems now.
Our favourite is Chaser.
With Chaser you can set up automated email sequences to remind customers that debts are becoming due, and to systematically, persistently, and politely chase those debts after they become due. It’s got fantastic flexibility because you can set up different chase profiles for different customers and for different debts.
Take a look at chaser here to see for yourself.
So there are 3 quick and easy ideas that will vastly improve the collection of cash in your business.